Financial Disclosure: How Much is Enough?
May 16, 2010 4 Comments
I had a chance to research the “financial disclosure” subject and I found an important article which discusses the information overload related to financial disclosure. Radin (2007) argues against “excessively long financial statement disclosures.” He cites reasons the accounting profession should be worried about financial statement disclosure overload. He then asserts that there is significant anecdotal evidence that the footnotes to a company’s financial statements are read only by the registrants’ drafters and accountants. The article is fascinating and surfaces old questions like “How much information is enough?” and “Where should we stop?” the article provokes the need to analyze the usefulness and effectiveness of the current financial disclosures. Information redundancy and repetition like “If our customers stop buying our product, sales may decrease” (Radin, 2007, p. 9) should be eliminated and an effective reporting method maybe created to communicate the important disclosed information to the readers. Lately, marketing expert are able to pass their massages to the public in 30 seconds and cartoonist are able to simplify a complicated issue into a funny drawing, however, accountants are still writing a longer and more complicated reports (Radin, 2007).
Radin, A. (2007). Have we created financial statement disclosure overload? CPA Journal, November, 6-9.